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Why investment in gold makes sense

Sunday, October 22, 2017
Deccan Herald

India is the largest consumer of gold in the world. Our love affair with the metal is age old. Roughly 800 to 900 tonnes, about a third of the total gold mined in the world, is consumed in India.

Domestic production being negligible, we are the largest importers of gold. The Indian attachment to gold is a product of our history. Gold is rare, beautiful and stable. It does not depreciate in value nor deteriorate in quality with time. It is compact and can be carried around with ease. It can be buried underground without loss of quality or quantity.

Gold is therefore permanent, portable and easily-hidden wealth. In the olden days, when property rights were not secure gold was the most sensible way to accumulate wealth. Along the way, it became part of our culture and tradition.

Many of our traditions have changed over the years, but large scale purchases of gold during weddings and festivals continue.

While people have been investing in gold for ages, in the last few decades we have seen new avenues for investment emerge that give present day investors a range of options not available in earlier days. No doubt, each of these options has its own advantages, disadvantages and risks, which have to be kept in mind along with the investor’s own circumstances while making a choice. According to a recent nationwide debt and investment survey, an average Indian household holds 84% of its wealth in real estate, 11% in gold and the remaining 5% in financial assets. Read more